Gold & Silver Daily

Ed's Critical Reads

Feb 26, 2015

Morgan Stanley to Pay $2.6 billion to Settle Charges Over Mortgages

Morgan Stanley said Wednesday that it has agreed to pay $2.6 billion to settle with the federal government over its role in the mortgage bubble and subsequent financial crisis.

The settlement makes Morgan Stanley the latest Wall Street bank to reach a settlement with federal authorities, following the billions paid by JPMorgan Chase, Bank of America and Citigroup.

The $2.6 billion will go to "resolve certain claims" the Justice Department intended to bring against Morgan Stanley related to its mortgage division, the bank said in a regulatory filing.

The Justice Department declined to comment. In the regulatory filing, Morgan Stanley said the agreement is not been finalized and could fall though.

This AP story, filed from New York, appeared on the Internet site at 7:25 p.m. EST on Wednesday evening---and today's first news item is courtesy of West Virginia reader Elliot Simon.

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Lure of Wall Street Cash Said to Skew Credit Ratings

Michelle Choi, an analyst for Moody’s Investors Service, gave a credit rating to bonds issued by a New Jersey town in September. In October, she switched sides and started working for the town’s underwriter, Morgan Stanley.

Choi is one of hundreds of employees at Moody’s and other credit-rating companies, including Standard & Poor’s and Fitch Ratings, who’ve gone to work for Wall Street since the 2008 financial crisis exposed the conflicts at the heart of the ratings business.

While there’s no evidence that Choi’s job-hunting influenced the grade she gave Evesham Township’s debt, and the town chose Morgan Stanley after Choi rated its bond, the rising number of job changes in the industry raises a question: can credit analysts be impartial about grading bonds while looking for employment at banks that underwrite them?

No!  Really???  Who would have thought that???  I'm shocked---tee hee!  This Bloomberg news item appeared on their Internet site at 5:00 p.m. Denver time yesterday afternoon---and it's the second contribution in a row from Elliot Simon.

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Crude Oil Inventories Surge For 7th Week in a Row to Record Highs Amid Record Production

Oil prices dumped (last night's major 8.9 million barrel inventory build from API), pumped (the Saudi minister claiming "demand is growing" - which just seems like total fiction given economic backdrops and China's VLCC count plunge), and then this morning, dumped setting the scene for this morning's EIA inventory data. Against expectations of an 8 million barrel build, crude inventories saw a 8.43 million barrel build (5 times higher than the 5 year average). Record levels of production and record total inventory sent WTI plunging out of the gate but it is stabilizing for now...

U.S. oil production hit a new record high... (despite the declining rig count - perhaps finally putting a nail in that meme)...

This short, but very interesting Zero Hedge story contains some excellent charts---and is definitely worth your time.  It was posted on their website at 10:37 a.m. EST yesterday---and I thank Dan Lazicki for sending it our way.

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Rent walkouts point to strains in U.S. farm economy

Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed.

Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.

The tensions add to other signs the agricultural boom that the U.S. grain farming sector has enjoyed for a decade is over. On Friday, tractor maker John Deere cut its profit forecast citing falling sales caused by lower farm income and grain prices.

Many rent payments – which vary from a few thousand dollars for a tiny farm to millions for a major operation – are due on March 1, just weeks after the U.S. Department of Agriculture (USDA) estimated net farm income, which peaked at $129 billion in 2013, could slide by almost a third this year to $74 billion.

This Reuters article filed from Chicago, was posted on their Internet site at 5:45 a.m. EST on Monday morning---and it's another item I found in Wednesday's edition of the King Report.  It's a must read.

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The disappeared: Chicago police detain Americans at abuse-laden 'black site'

The Chicago police department operates an off-the-books interrogation compound, rendering Americans unable to be found by family or attorneys while locked inside what lawyers say is the domestic equivalent of a CIA black site.

The facility, a nondescript warehouse on Chicago’s west side known as Homan Square, has long been the scene of secretive work by special police units. Interviews with local attorneys and one protester who spent the better part of a day shackled in Homan Square describe operations that deny access to basic constitutional rights.

At least one man was found unresponsive in a Homan Square “interview room” and later pronounced dead.

Brian Jacob Church, a protester known as one of the “NATO Three”, was held and questioned at Homan Square in 2012 following a police raid. Officers restrained Church for the better part of a day, denying him access to an attorney, before sending him to a nearby police station to be booked and charged.

This article showed up on Internet site at 9:43 p.m. GMT on Tuesday evening---and I found it embedded in a GATA release.

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Retire Abroad and Offshore Your IRA: International Man

Money represents your energy and your time: the days, the weeks, the months, the years it takes you to earn it, and all the things you hope to do with it.  In short, money is like stored life.

Taxation, inflation, and artificially low interest rates are therefore similar to a needle and syringe tapped directly into your vein, sucking the life right out of you.

Sure, you can diversify your investments and take actions to minimize your taxes, but that alone is insufficient if the after-tax returns on your portfolio don’t keep up with the real rate of inflation—which is always higher than the cooked “official” numbers—let alone your investment goals.

The problem will only be compounded as politicians the world over look for more ways to tax or otherwise extract stored purchasing power. Investment income and retirement savings will be a juicy target. Just look at how capital gains and dividend tax rates have increased in recent years.

This commentary by International Man's senior editor Nick Giambruno appeared on his website yesterday and, if you are an American citizen, it's certainly worth reading.

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Kicking another can: E.U. gives France until 2017 to fix deficit

The European Commission on Wednesday (25 February) gave France another two years to bring its budget within EU rules - the third extension in a row - saying that sanctions represent a "failure".

France has until 2017, having already missed a 2015 deadline, to reduce its budget from the projected 4.1 percent of GDP this year to below 3 percent.

"Sanctions are always a failure," said economic affairs commissioner Pierre Moscovici adding that "if we can convince and encourage, it is better".

Valdis Dombrovskis, a commission vice-president dealing with euro issues, admitted that France is the "most complicated" case discussed on Wednesday.

What a farce this European Union has turned into!  This article appeared on the Internet site at 7:34 p.m. Europe time on Wednesday evening---and it's courtesy of Roy Stephens.

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Greece to stop privatisations as Syriza faces backlash on deal

Greece's Left-wing Syriza government has vowed to block plans to privatise strategic assets and called for sweeping changes to past deals, risking a fresh clash with the eurozone's creditor powers just days after a tense deal in Brussels.

"We will cancel the privatisation of the Piraeus Port," said George Stathakis, the economy minister. "It will remain permanently under state majority holding. There is no good reason to turn it into a private monopoly, as we made clear from the first day.

"The deal for the sale of the Greek airports will have to be drastically revised. It all goes to one company. There is no way it will get through the Greek parliament."

The new energy minister, Panagiotis Lafazanis, warned that Syriza will not sell the Greek state's 51pc holding of the electricity utility PPC, power grid ADMIE or state gas company DEPA. "There will be no energy privatisations," he said.

This commentary by Ambrose Evans-Pritchard appeared on the Internet site at 7:52 p.m. GMT on Wednesday evening---and I thank Roy Stephens for sending it our way.  It's worth reading.

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Kiev introduces rationing, as falling hryvnia causes shopping binge

Ukrainian supermarkets have imposed rationing of basic products after the drastic fall in the value of the hryvnia. The currency has lost 70 percent of its value causing people to stockpile food and buy electronics as a hedge.

Restrictions apply for goods such as cooking oil, flour and sugar, Ukraine’s news agency UNN reports Wednesday. Retailers may sell no more than two bottles of sunflower oil, and two packs of buckwheat per customer and, depending on the store, from 3 to 5 kilograms of flour and sugar.

Bread, rice, potatoes, meat and milk are not yet rationed, but are not so plentiful on supermarket shelves.

Stores have also see higher demand for household appliances, as people consider consumer electronics an investment as prices increase on a daily basis, RIA reports. Inflation in Ukraine is expected to reach 27 percent by the end of 2015.

This must read Russia Today news item showed up on their Internet site at 2:12 p.m. on Wednesday afternoon Moscow time, which was 6:12 a.m. in Washington.  I thank Roy Stephens for digging it up for us.

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This is What Happens to Gold in a Hyperinflationary Currency Crisis: Ukraine Edition

As Ukraine's socio-economic situation goes from worse to worst-er, today's announcement by President Poroshenko that the government will take actions to stabilize the currency (which as we previously noted, appears to be heading for hyperinflation) has Ukrainians rushing for the exits into precious metals... with only one goal in mind - wealth preservation.

This is what gold does in a fiat-currency crisis. Now if only Ukraine actually still had some gold...

Furthermore, according to RIA, on Tuesday, Ukrainian television channel Ukraina announced that with the new exchange rate, the minimum wage in Ukraine stands at around $42.90 per month, which according to the channel, is lower than in Ghana or Zambia.

Although this is a gold-related story, I thought it fit best in this spot.  The embedded hryvnia/gold chart is one you know well.  This brief article appeared on the Zero Hedge website at 1:22 p.m. EST on Wednesday afternoon---and I thank Dan Lazicki for sending it.

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Inside the Ukraine: John Batchelor interviews Stephen F. Cohen

The astounding military events along with the political fallout are far more dramatic under Minsk2 than at anytime during the active Ukraine Civil War.

The danger for continued war in Ukraine will depend on whether Kiev gets outside help.  Whether NATO is involved in the fighting will likely depend on the dove side of the E.U., Merkel and Hollande and others, deciding to go along with Washington. That has not changed, but for Cohen, this is less likely.  However Kiev's fortunes have declined even more since Poroshenko refused a surrender of his forces in the Debaltseve Caldron.  Cohen does a wonderful job of describing those final moments in the Cauldron. As it stands now there is no military of any usefulness for Kiev in the west of Ukraine, and as been stated several times, arming an army actually requires an army to arm---and Kiev simply does not have a military left.

The U.S. (who significantly was not invited to the recent Minsk talks) now has been making even more belligerent war talk. And Moscow is silent; the critical time is at hand. Putin knows. This is a deciding moment for the West, the United States, NATO, Europe, Russia and Ukraine. If Washington continues to push the war option we are looking at boots on the ground and serious political problems in Europe and for NATO.

Ordinarily I'd post this on Saturday, but here it is now, as it's very timely.  This 39:47 minute audio interview from Tuesday is certainly a must listen if you have the interest, which you should.  I thank Larry Galearis for bringing it to our attention.

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Kiev trying to invalidate weapons withdraw plan, undermine Minsk deal – militia officials

Kiev is trying to invalidate the plan of heavy weaponry withdrawal from the demarcation line in eastern Ukraine, thus undermining the Minsk peace deal, Donbass officials claim. An OSCE top official says Kiev is not pulling away its artillery.

According to the peace deal, heavy weapons must be withdrawn from the agreed demarcation line starting February 22. But Donetsk representative Denis Pushilin and Lugansk representative Vladislav Deynego have claimed in a joint statement that Kiev is “attempting to invalidate the plan.”

The Organization of Security and Co-operation in Europe (OSCE), which has a monitoring mission in the conflict area, said Kiev has so far failed to begin moving its weapons from the demarcation line.

“Ukrainian military forces keep silent for the moment being. They don’t pull out their heavy weaponry and say that a pause is needed. That is what really triggers certain concern of the OSCE, as this pause may last indefinitely,” said the Russian ambassador to the organization, Andrey Kelin.

This news story put in an appearance on the Russia Today website at 1:54 a.m. Moscow time on their Thursday morning---and it's another contribution from Roy Stephens.

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Seven Russian banks downgraded by Moody's

Ratings agency Moody's lowered its assessment of seven Russian financial institutions, including the banking arm of Gazprom, because of recessionary threats.

The downgrade for Sberbank, Bank VTB, Gazprombank, Russian Agricultural Bank, Agency for Housing Mortgage Lending, Vnesheconombank and Alfa-Bank follows a lowering by Moody's of the government debt rating to Baa3, the lowest investment grade rating, last week.

Moody's said it also lowered the financial strength ratings of Sberbank, Bank VTB, JSC , Gazprombank and Alfa bank.

"This is due to Moody's expectation that the prolonged recessionary environment in Russia will produce a very challenging operating environment for the country's leading banks and thereby impact their financial fundamentals," the ratings agency said in a Tuesday profile.

Without doubt this move is politically motivated.  This UPI article, filed from London, showed up on their Internet site at 5:59 a.m.---but doesn't give the time zone, but I would assume EST.  I thank Roy Stephens for sharing it with us.

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Putin: Gas supplies to Europe could suffer in 3-4 days if Kiev doesn't pay

Russia will cut off gas supplies to Ukraine if Kiev fails to pay in “three or four days,” President Vladimir Putin said, adding that this "will create a problem" for gas transit to Europe.

“Gazprom has been fully complying with its obligations under the Ukraine gas supply contract and will continue doing that,” Putin told reporters after talks with the president of Cyprus on Wednesday. “The advance payment for gas supply made by the Ukrainian side will be in place for another three to four days. If there is no further prepayment, Gazprom will suspend supplies under the contract and its supplement. Of course, this could create a certain problem for [gas] transit to Europe to our European partners.”

However, Putin expressed the hope that it would not come to that, stressing that “it depends on the financial discipline of our Ukrainian partners.”

This news item was posted on the Russia Today Internet site at 2:07 p.m. Moscow time on their Wednesday afternoon---and it's another offering from Roy Stephens.

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Bad for Business: After NSA Hack China Stops Buying Major U.S. Tech Brands

China has been axing major U.S. technology companies from its government purchasing list in favor of local brands. Some analysts believe fears over NSA spy technology could be to blame.

The list of products for the Central Government Procurement Center (CGPC), which is approved by the Chinese Ministry of Finance, includes over 5,000 products, 2,000 of which were added in the last two years, and almost entirely from domestic companies. Among those products, foreign brands have fallen by a third, and among security-related products, by a half. As of two years ago, Cisco Systems had 60 items on the list, but now has none. Among other companies, whose products were excluded from the list are Intel’s security brand McAfee, Apple, and Citrix. 

Though there are non-espionage-related reasons why China might be preferring local brands, the decline in foreign products does seem to coincide with the leaks made by NSA whistleblower Edward Snowden in 2013 about massive US spying programs. 

This article showed up on the Internet site at 1:33 a.m. Moscow time this morning---and has been updated since.  I thank Roy Stephens for his final contribution to today's column.

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Dollar Vigilante cites GATA in review of complaints about gold market rigging

In a review of complaints of manipulation of the monetary metals markets, Justin O'Connell of the Dollar Vigilante cites GATA Chairman Bill Murphy's "groundbreaking" testimony to a hearing held by the U.S. Commodity Futures Trading Commission in 2010.

O'Connell's commentary is headlined "A Brief Recent History of Precious Metals Manipulation Investigations" and it was posted on the Internet site yesterday---and it's something I found on the Internet site yesterday.

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Koos Jansen: Austrian audit agency faults central bank over gold at Bank of England

Austria's government audit office has criticized the nation's central bank for depositing a disproportionate amount of the nation's gold reserves with the Bank of England, Bullion Star market analyst and GATA consultant Koos Jansen reports today. Jansen adds that the Austrian central bank has been steadily converting its foreign-vaulted gold from "unallocated" to "allocated" status -- that is, from being a mere credit against the depository to being ownership of particular metal.

This very interesting commentary by Koos showed up on the Singapore website on their Wednesday sometime---and I found this story in a GATA release as well.

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Lawrence Williams: Can platinum regain its premium over gold in Q2-Q3?

Since writing my article on what I saw as the likely reasons behind platinum’s poor performance of late despite the metal being in an apparent substantial supply deficit, a couple more things on the metal have come to my attention – one perhaps marginally positive and the other negative.

On the positive side, precious metals consultancy, Metals Focus, in its latest Precious Metals Weekly, reckons that there’s a good chance that platinum will regain its premium over gold, perhaps as soon as in Q2 this year and possibly get back to a premium level during the year averaging as much as $100 over the gold price (which is pretty much the normal situation). However there’s little in their opinion on the fundamentals side to support this argument, the key factor, being in their view, that when the U.S. Fed eventually ceases shilly-shallying and starts to raise interest rates, it will be the gold price which bears the bulk of any adverse reaction in the markets and platinum less affected. To an extent this is perhaps fair comment, but one suspects that the gold price is already taking into account a modest interest rate increase later this year and while there may be a knee-jerk reaction when the announcement is made, one suspects any price downturn will be short lived.  And anyway, the way the markets behave a fall in the gold price will likely also see a platinum price downturn too.

This commentary by Lawrie is definitely worth reading---and he was kind enough to post my comments that I made on his previous article on platinum that he posted on Tuesday.  This article appeared on the Internet site at 12:21 p.m. GMT yesterday afternoon.

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Lawrence Williams: Have the big banks been manipulating gold and silver prices?

For many years most of the perennially bullish precious metals commentators, led in terms of continuing vehemency on the matter by the Gold Anti Trust Action Committee (GATA), have been claiming that precious metals prices are being heavily manipulated by the big commercial banks in collusion with the U.S. Fed and other central banks. And they cite as evidence various documentation, mostly quite old, obtained under freedom of information requests, together with some seemingly very strange volume and price movements on the COMEX markets at potentially key inflection points for precious metals prices, as well as the huge short positions held in all four major precious metals by a small group of major banks in particular. It has always been the gold bulls’ gripe that the evidence they have come up with has been totally ignored by the mainstream media, but is this all changing?

In a key article published on Monday this week, perhaps arguably the most prestigious global mainstream financial newspaper of all, The Wall Street Journal, reported that at least 10 major global banks are being investigated for precious metals market rigging by the U.S. authorities. The paper notes specifically that it has received reliable information that prosecutors in the Justice Department’s antitrust division are scrutinizing the benchmark price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, presumably into activities on the major commodities markets.

This commentary by Lawrie appeared on the Internet site at 3:44 p.m. London time yesterday afternoon---and it's certainly worth your while.

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China gold imports from Hong Kong rebound in January

China's gold imports from Hong Kong rose in January from the previous month, data showed on Thursday, reflecting increased demand ahead of the Lunar New Year.

Net gold imports from main conduit Hong Kong climbed to 76.118 tonnes last month from a three-month low of 71.381 tonnes in December, according to data e-mailed to Reuters by the Hong Kong Census and Statistics Department.

Jewellery demand typically rises ahead of the Chinese New Year, which fell in February this year. Analysts say import demand from the world's second biggest gold consumer after India is likely to recover this year.

This short Reuters article, filed from Singapore, appeared on their Internet site at 3:05 p.m. India Standard Time on their Thursday afternoon---and I found it on the Sharps Pixley website at 5:30 a.m. EST this morning.  Most of what else is written about China's imports in this piece is pure bulls hit, so just read around it.

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Feb 25, 2015

Stocks and Bonds Soar as Dollar Dives

Despite being told by The Fed that stocks are over-valued, investors decided today was the day to take that money off the sidelines and BTFATH. Everything is surging in equity land as bad data, worse earnings, and Ukraine were trumped by a little old lady in Washington and a self-referential list of growth-destroying reforms for Greece. However, as investors sell sell sell their dollars (USD Index down hard) they are buying US Treasuries with both hands and feet...

This short Zero Hedge piece, with three excellent charts, appeared on their Internet site at 11:25 a.m. EST on Tuesday morning---and I thank Dan Lazicki for today's first story.

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U.S. Macro Crashes Near 1-Year Lows, February Running At 90% Data Miss Rate

Despite this morning's U.S. Services PMI rise, U.S. macro data is running at a 90% miss rate in February and Richmond Fed's tumble from 6 to 0 (11mo lows) along with The Conference Board's Consumer Confidence dropping the most since Oct 2013 merely confirm this trend. This is the biggest 4-month slump in Richmond Fed since 2010 as practically every sub index deteriorated. California, Florida and New York saw over consumer confidence collapse and Texas saw 'present situation' plunge. US Macro data is now nearing its lowest in a year...

This is another brief Zero Hedge offering from Dan Lazicki.  It was posted on their Internet site at 10:45 a.m. EST yesterday morning.

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U.S. Economic Confidence Tumbles Back Into Negative Territory as "Hope" Fades

With economic data serially disappointing in 2015, it is probably not entirely surprising that Gallup's U.S. Economic Confidence Index fell to an average of -2 last week (with the biggest drop since July). This is the first time the index has had a negative weekly average since late December. Both the current conditions and outlook sub-indices tumbled but it was the future 'hope' index that fell the most with more people now saying the future will be 'poor' than believe it will be 'good'.

As Gallup reports, the U.S. Economic Confidence Index fell to an average of -2 for the week ending February 22.

This is the first time the index has had a negative weekly average since late December. Prior to that, the index had consistently been in negative territory since Gallup began tracking it daily in 2008.

This is another rather short Zero Hedge article from yesterday.  It showed up on their website at 2:51 p.m. EST---and it's the third contribution in a row from Dan Lazicki.

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This is Why Hewlett-Packard is Firing 58,000 employees

The biggest scandal in today's release of Hewlett Packard Q1 earnings was not that, just as the NASDAQ is knocking on 5000's door, it reported revenues of $26.8 billion missing consensus expectations of $27.3 billion, while beating non-GAAP EPS by 1 cent to $0.92 (up from $0.90 a year ago) entirely due to a massive reduction in outstanding stock and some truly gargantuan non-GAAP add backs (GAAP EPS declined from $0.74 a year ago to $0.73) pushing the stock down 7% after hours.

The biggest scandal was the company announced that having cut 44,000 workers so far, it will cut 58,000 jobs by the end of 2015.

Incidentally, just 10 years ago Hewlett Packard employed a total of 58,000 people in the entire US.

So why is the company axing 58 thousand workers? Simple: so it can cut enough costs on top and continue to fund its now exponential surge in stock buybacks, which in the just concluded quarter was a record $1.6 billion, an increase of 178% from a year ago, and 66% more than the company spent on CapEx, in the process making its shareholders even richer while its management team get massive equity-linked bonuses.

This tiny article, with an embedded chart that's worth the trip, appeared on the Zero Hedge Internet site at 6:58 p.m. EST on Tuesday evening---and it's another story from Dan Lazicki.

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"This Shorting Opportunity is as Great as 2007-2009", Billionaire Crispin Odey Warns

We have seen though some strange things, with Economics 101 turned on its head. We’ve seen that falling prices produce more supply, as the biggest producers see that they can take market share and use the opportunity by reducing average costs through excess production. We’ve seen that in the oil, minerals and iron ore industries. We have also seen in the last couple of years that as bond yields fall, governments are able to issue more debt.

But this time round the problem we have as well is that politics will start to rear its head and we are left to deal with politicians who are increasingly critical of the capitalist system’s ability to allocate capital and provide for society.

For me the shorting opportunity looks as great as it was in 07/09, if only because people are still looking at what is happening and believe that each event is an individual, isolated event. Whether it’s the oil price fall or the Swiss franc move, they’re seen as exceptions....

This down cycle is likely to be remembered in a hundred years, when we hope it won’t be rated for “How good it looks for its age!”. Sadly this down cycle will cause a great deal of damage, precisely because it will happen despite the efforts of the central banks to thwart it.

This commentary was embedded in another Zero Hedge article from yesterday afternoon.  This one showed up there at 3:12 p.m. EST---and it's now five in a row from Dan.  It certainly worth reading.

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J.P. Morgan to start charging big clients fees on some deposits

J.P. Morgan Chase & Co. is preparing to charge large institutional customers for some deposits, citing new rules that make holding money for the clients too costly, according to a memo reviewed by The Wall Street Journal and people familiar with the plan.

The largest U.S. bank by assets is aiming to reduce the affected deposits by billions of dollars, with a focus on bringing the number down this year, these people said. The move is the latest in a series of steps large global banks have been discussing in recent months to discourage certain deposits due to new regulations and low interest rates.

J.P. Morgan’s steps are among the most detailed and widespread. Specifics are likely to be unveiled Tuesday by J.P. Morgan executives at the bank’s annual strategy outlook with investors, these people said. Among other points, the bank is expected to stress alternatives customers affected by the deposit moves can use for their excess cash.

This WSJ article was picked up by the Internet site at 8:36 a.m. EST on Tuesday morning---and the first reader through the door with it was Norman Willis.

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Bank of New York Mellon in settlement talks over forex fraud, sources tell Reuters

Bank of New York Mellon Corp. is in settlement talks with the U.S. Justice Department and New York attorney general over claims the bank defrauded clients in foreign exchange transactions, according to sources familiar with the matter.

BNY Mellon last week revealed that it would take a $598 million charge as it sought to resolve matters including "substantially all" foreign exchange litigation it faced, though it did not specify which cases.

The bank faces several lawsuits, including class actions, stemming from allegations that it misled clients about how it determined currency exchange rates for certain transactions.

The Justice Department, which has a lawsuit against BNY Mellon pending in Manhattan federal court, is engaging in settlement talks, a person familiar with the matter said.

This story appeared on the Reuters website at 4:40 p.m. EST yesterday afternoon---and I found it embedded in a GATA release.

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Janet Yellen's Advice to Rand Paul

Federal Reserve Chair Janet Yellen mostly succeeded in her attempt to be vague about Fed policy in her semiannual appearance before Congress on Tuesday. On one issue, however, she was unequivocal -- and correct: A congressional audit of the Fed's interest-rate decisions is a very bad idea. 

The Fed is already "extensively audited," she said, and Senator Rand Paul's bill to audit it even more "would politicize monetary policy." Were such congressional micromanagement possible in the 1970s, she pointed out, former Fed Chairman Paul Volcker would probably not have been able to defeat inflation by pushing up interest rates to double digits and forcing the economy into a recession. 

Undermining the central bank's political independence would ultimately harm the economy. Studies show that independent central bankers are better stewards of their economies than are politically appointed finance chiefs. The reason is simple: Politicians often favor easy-money policies that promote short-term growth and boost their re-election chances, even if they bring on inflation later.

Well, no shades of gray here.  Bloomberg is no friend of Rand Paul.  This short editorial appeared on the Bloomberg website at 3:35 p.m. EST yesterday afternoon---and I thank Dan Lazicki for sending it.

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The New York Sun: Janet Yellen's audit

It strikes us that it was passing strange for Chairman Janet Yellen to wave a copy of the central bank’s audited financial statement as a prop in answering Congress on Senator Rand Paul’s “Federal Reserve Transparency Act.” She did this earlier today at the hearing of the Senate Banking Committee. Her suggestion that a standard financial audit is what the Transparency Act is all about was almost contemptuous. So was her suggestion that the bill that has already twice passed the House — September’s bipartisan vote was 333 to 92 — is somehow designed to politicize monetary policy.

Just to underline the point, what Mrs. Yellen held up was an audited report of the kind that is done by accountants using green eye shades. What the Congress wants is a look not only at the books but also at the Fed’s holdings and minutes and transactions overseas. It is not an attempt to interfere with Fed policy. It is an attempt to find out what the Federal Reserve is doing. It’s just shocking that the Federal Reserve would want to deny to its creator this kind of inspection once every, oh, say, century.

There's no question where The N.Y. Sun lies on this issue, either.  This editorial put in an appearance on The New York Sun's website yesterday---and I found it on the Internet site.  It's worth reading.

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Ex-Plunge Protection Team Whistleblower: "Governments Control Markets; There Is No Price Discovery Anymore"

One year after the great stock market crash in 1987, US President Ronald Reagan launched the "Working Group on Financial Markets." Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the "Plunge Protection Team."

One glimpse at a few days during 2007/8 and it is clear that 'someone' with infinitely deep pockets was able to support markets on several critical days - though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. However, as Dr. Pippa Malmgren - a former member of the U.S. President’s Working Group on Financial Markets - it is not conspiracy theory, it is conspiracy fact: "there's no price discovery anymore by the market... governments impose prices on the market."

In this 38-minute interview Lars Schall, for Matterhorn Asset Management, speaks with Dr Pippa Malmgren, a US financial advisor and policy expert based in London. Dr Malmgren has been a member of the U.S. President’s Working Group on Financial Markets (a.k.a. the “Plunge Protection Team”). They address, inter alia...

I've had several readers send me this interview over the last few days---and have put off posting it until now.  The interview runs for 38 minutes---and you can read all about it, as Zero Hedge has put their spin on it which, along with the interview, is worth your while.  This is also courtesy of Dan Lazicki.

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Bill Bonner: The Day the ATMs Run Out…

Please remember this warning when you go to the ATM to get cash… and there is none!

While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us.  Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.

Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage?  Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.

This very interesting article by Bill showed up on the Internet site on Tuesday sometime---and once again I thank Dan Lazicki for sharing it with us.  It's certainly worth reading.

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Washington Has Resurrected the Threat of Nuclear War — Paul Craig Roberts

Foreign Affairs is the publication of the elitist Council on Foreign Relations, a collection of former and current government officials, academics, and corporate and financial executives who regard themselves as the custodian and formulator of US foreign policy. The publication of the council carries the heavy weight of authority. One doesn’t expect to find humor in it, but I found myself roaring with laughter while reading an article in the February 5 online issue by Alexander J. Motyl, “Goodbye, Putin: Why the President’s Days Are Numbered.”

I assumed I was reading a clever parody of Washington’s anti-Putin propaganda. Absurd statement followed absurd statement. It was better than Colbert. I couldn’t stop laughing.

To my dismay I discovered that the absolute gibberish wasn’t a parody of Washington’s propaganda. Motyl, an ardent Ukrainian nationalist, is a professor at Rugers University and was not joking when he wrote that Putin had stolen $45 billion, that Putin was resurrecting the Soviet Empire, that Putin had troops and tanks in Ukraine and had started the war in Ukraine, that Putin is an authoritarian whose regime is “exceedingly brittle” and subject to being overthrown at any time by the people Putin has bought off with revenues from the former high oil price, or by “an Orange Revolution in Moscow” in which Putin is overthrown by Washington orchestrated demonstrations by US financed NGOs as in Ukraine, or by a coup d’etat by Putin’s Praetorial guards. And if none of this sends Putin goodbye, the North Caucasus, Chechnya, Ingushetia, Dagestan, and the Crimean Tarters are spinning out of control and will do Washington’s will by unseating Putin. Only the West’s friendly relationship with Ukraine, Belarus and Kazakstan can shield “the rest of the world from Putin’s disastrous legacy of ruin.”

What we see here with Motyl is the purest expression of the blatant propagandistic lies that flow continually from the likes of Fox “News,” Sean Hannity, the neocon warmongers, the White House, and executive branch and congressional personnel beholden to the military/security complex.

This very interesting and disturbing commentary by Paul was posted on his Internet site on Tuesday sometime---and the stories from Dan just keep on coming.

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Making Me Pay For My Crimes Would Send “Message of Uncertainty to the Markets”: Bank President to Spanish Judge

A Spanish judge by the name of Fernando Andreu recently violated one of the most important unwritten rules of global finance: namely, that banks and bankers are effectively immune to all laws of all lands (barring, of course, Iceland). As I reported roughly 10 days ago, Andreu had ordered Bankia, its parent company state-owned BFA, the bank’s former chairman, Rodrigo Rato, and three other former directors to pay an €800 million civil liability bond for signing off on fraudulent financial statements in the run up to the bank’s 2011 IPO.

If the defendants fail to cough up the full amount before March 13th, the authorities will embargo assets belonging to them with the equivalent market value. With the clock ticking down and the days flying by, it was just a matter of time before the defendants hit back – and hard!

The first to hit back was Rodrigo Rato, the bank’s former chairman and one-time IMF president. In a 75-page notice of appeal that was leaked to the Spanish press, Rato cautioned that Judge Andreu’s “premature” decision to force the six defendants to compensate the thousands of shareholders they are accused of defrauding could end up provoking a “much greater evil” than that it is supposed to address.

In the worst case scenario, the document warns, it could send a “message of uncertainty to the markets,” which could in turn exert downward pressure (otherwise known as gravity) on the already semi-defunct bank’s share price. This is not the first time that a panicked banker has used this argument; indeed, it is the preferred alibi of all 21st-century banking racketeers.

This very interesting news item/commentary was posted on the Internet site on Monday---and it's courtesy of Brad Robertson.

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The Reason Why the Eurogroup Rushed to Approve the Greek Reform Package?

As we noted earlier today, there was some confusion over the plight of the Greek reform proposal document, which initially was said to have been delayed until today, only for the Troika, pardon, Institutions, to flip around and say they had actually received it before midnight on Monday. How could the two be possible? Courtesy of Yannis Koutsomitis, who had the simple but profound idea of looking at the properties tab in the leaked Varoufakis draft of the agreed to proposals, we now know.

As it turns out, the reason why not only the Troika received an agreed to version of the Greek reform proposals "before midnight on Monday", but rushed these through with a favorable agreement today, is that, drum-roll, the European Commission drafted the entire letter!

All Yanis Varoufakis had to do was agree to the letter that the Troika had previously written and agreed in advance was agreeable to it, and send it back. The skeptics are encouraged to play around the original pdf "leak" found here.

As for the actual author of the "Greek" reform package, a document which was created at 10:09 pm on Monday, February 23, 2015 (so technically, yes, before midnight on Monday) was one Declan Costello of the European Commission.

This interesting news item showed up on the Zero Hedge website at 11:51 p.m. EST on Tuesday morning---and it's another contribution from Dan Lazicki.

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Tensions high as Greece scrambles to keep rescue deal alive

Greece has vowed to shake up labour markets and push through far-reaching reforms to avert a fresh showdown with eurozone creditors this week, hoping to stave off bankruptcy within days as cash runs dry.

The radical Syriza government submitted a five-page list of measures to EMU officials in Brussels in time for a deadline on Monday, including an assault on trade union powers that risks setting off a revolt by the movement's Communist and hard-left factions.

Failure to reach an agreement would lead to yet another round of crisis talks, backed by the threat that the European Central Bank could at any time cut off emergency liquidity support for Greek lenders and effectively force the country out of the euro.

This Ambrose Evans-Pritchard commentary appeared on the Internet site at 8:23 p.m. GMT on Monday evening local time---and I thank Roy Stephens for sending it along very early on Tuesday morning.  It's worth reading.

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Eurozone clears path for Greek bailout extension

Eurozone finance ministers on Tuesday (24 February) approved a list of reforms submitted by Athens and cleared the path for national parliaments to endorse a four-month extension of the Greek bailout, which otherwise would have run out on 28 February.

"We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions," the Eurogroup of finance ministers said in a press statement.

National parliaments, notably Germany's Bundestag, will still have to approve the move this week.

The three international creditors - the European Central Bank, the European Commission and the International Monetary Fund - earlier that day gave an assessment of the reforms plan and said they were "sufficiently comprehensive to be a valid starting point" for the bailout loans to be extended and paid out.

This news item was posted on the Internet site at 7:17 p.m. Europe time yesterday evening---and it's courtesy of Roy Stephens.  There was also a story about this in The Telegraph yesterday evening GMT---and it's headlined "Troika raises fresh concerns over Greece's last-ditch debt deal"---and I found it today's edition of the King Report.

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David Stockman: Kick-The-Can Has Morphed Into a Blatant Farce

The whole Kabuki dance in the Eccles Building is about hand signals to Wall Street carry traders; its a reflection of the desperate fear of our monetary politburo that having inflated for the third time this century the mother of all financial bubbles, they must now keep it going literally one meeting at a time—lest it splatter again and destroy the illusion that an egregious spree of money printing has saved the main street economy.

Likewise, it now transpires that the bruising political war of words between the Germans and the “radical” Greek government has been suspended for another few weeks. And the reason is a pathetic fear that unites the parties despite their irreconcilable substantive policy differences. Namely, that the markets will crater upon even a hint that a real solution is on the table, and that the way to keep the beast at bay is to cover their eyes, kick-the-can and hope something turns up to avert the next crisis a few weeks down the road.

Still, this is getting beyond juvenile. If there were any adults in the room they would focus on quickly shaping a workable Greek default and exist—-not on perpetuating the lie that Greece can ever recover from its debt servitude to the EU superstate and IMF.

Ironically, the fire breathing leftists who have taken over in Athens have compliantly strapped on the poodle collar left behind by the Samaras government. It seems that their game-theory spouting Keynesian financial spokesman, Yanis Varoufakis, also fears a thundering upset in the casino. So the Syriza government stumbles forward——now visibly toting the massive debt imposed on them by the Eurozone and IMF in order to bailout the German, French and Italian banks.

This longish, but worthwhile commentary by David put in an appearance on his Internet site yesterday sometime---and it's another contribution from Roy Stephens.

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East Ukraine artillery withdrawal focus of FMs meeting – as Poroshenko buys UAE weapons

While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE.

The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment.

It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting. He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back.

This story was posted on the Russia Today website at 11:44 a.m. Moscow time on their Tuesday morning, which was 3:44 a.m. in Washington.  I thank Roy Stephens for sending it along.

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OPEC will hold extraordinary meeting if oil plunge continues – cartel president

The OPEC member states are discussing the possibility of an emergency meeting should oil prices continue to fall, said Nigerian Oil Minister, and OPEC President Diezani Alison-Madueke. Prices have dropped by than half since their peak last summer.

If the price “slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” said Alison-Madueke, as quoted by the Financial Times, adding that discussions are already underway.

“Almost all OPEC countries, except perhaps the Arab bloc, are very uncomfortable,” she said. As the cartel’s president, she is responsible for maintaining communication with member countries and Secretary-General El-Badri in case of an emergency meeting.

This Russia Today news story showed up on their Internet site at 3:05 p.m. Moscow time on their Tuesday afternoon---and it's another contribution from Roy Stephens, for which I thank him.

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Big Banks Face Scrutiny Over Pricing of Precious Metals

U.S. officials are investigating at least 10 major banks for possible rigging of precious-metals markets, even though European regulators dropped a similar probe after finding no evidence of wrongdoing, according to people close to the inquiries.

Prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.

HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.

Also under scrutiny are Bank of Nova Scotia , Barclays PLC, Credit Suisse Group AG , Deutsche Bank AG , Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.

I had a lot of readers send me this Wall Street Journal story yesterday---and the first person through the door with a link that I could use was Ken Hurt.  But reader Michael McKay sent it to me as well, along with the following comments, which I thought worth sharing:  "This article was on the Front Page of the print edition.  Because this edition (central) serves Chicago, the seat of the Commodity markets, you can be very sure this was noticed by ALL the top folks. Trust me Ed, I was 23 years in those circles. This is the revealing of an open open secret that is the next big thing. But it it also true that the C[ommodity?] Markets are so very specialized that only those closest to the Metals know how significant this is.  I recommend keep pushing your index finger into the open wound that this story is.  Leverage is there."  From your lips, to God's ears, Michael!

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Bank of England denies secret futures trading on CME Group exchanges in U.S.

Bank of England Governor Mark Carney today told the Treasury Committee of the House of Commons that the bank is not participating in CME Group's program by which central banks receive discounts for their secret trading in all major U.S. futures markets.

Carney's denial came in response to a question from committee member Steve Baker, Conservative for Wycombe in England.

While no mainstream financial news organizations will question central banks about their secret trading in the markets, at least the issue seems to have come to the attention of some elected officials in Britain.

I found this worthwhile commentary, plus a video link, posted on the Internet site yesterday.

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Gold and silver prices: The next bank rigging scandal?

The world's biggest banks are still reeling from the consequences of the Libor and foreign exchange scandals, but U.S. authorities are now investigating the possibility of more rigging.

Several banks are being scrutinised over how they set influential benchmarks in the markets for gold, silver, platinum and palladium in London, with at least 10 under investigation from the Department of Justice (DoJ) and Commodities and Futures Trading Commission (CFTC), according to reports.

The benchmarks, which influence the prices of financial products as well as valuable jewellery, were set by a telephone conference call by a group of banks until last year, when they were overhauled amid mounting scrutiny of market rigging.

This gold-related news item showed up on the Internet site at 12:36 p.m. GMT yesterday---and in many respects its similar to the WSJ story further up.  It's another item I found in this morning's edition of the King Report.

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Jim Armitage: For HSBC bashers, this latest misfortune is pure gold

If you thought HSBC-bashing would quickly drop off the list of national sports, think again.

As if all the chicanery and wrongdoing around its Swiss tax evasion foundry weren’t enough, now it admits it’s also under investigation for possible rigging of the gold price.

This time, the U.S. regulators are probing, but the possible collusion happened here in London.

It’s tempting now to tally up a list of the charges and suspicions against HSBC, from sanctions busting to aiding Mexican drug cartels, through Libor and currency fixing to, now, potentially manipulating the price of gold, silver, platinum and palladium.

Probably guilty as charged, especially in gold.  This article appeared on the London Evening Standard Internet site at yesterday GMT---and it's courtesy of Nick Laird

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Swiss Watchdog Says It's Looking at Possible Gold Market Manipulation

Switzerland's competition commission WEKO is looking into possible manipulation of price fixing in the precious metals market, its spokesman said today.

"We have a preliminary investigation into the manipulation of gold and precious metal price fixing," the spokesman said. He declined to say which banks were involved.

The spokesman said this preliminary investigation began in 2014, without elaborating.

This Reuters story appeared on their Internet site at 12:48 p.m. EST yesterday---and it's another gold-related news item I found in a GATA release.

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Gold Holdings of Eurozone Rise to 10,792 Tonnes – ECB’s “Reserve of Safety” Accumulated

The Euro zone raised its gold holdings by 7.437 tonnes to 10,791.885 tonnes in January, International Monetary Fund data released overnight showed.

The rise in gold holdings was small in tonnage terms and in percentage terms  – especially when viewed in the light of the recently launched ECB’s €1 trillion Q.E. monetary experiment.

Nevertheless, the rise in Euro-area gold holdings shows how the ECB continue to view gold as an important monetary asset. Mario Draghi said of gold in October 2013 that gold is a “reserve of safety” that “gives you a value-protection against fluctuations against the dollar.”

Draghi told an open forum at Harvard’s Kennedy School of Government, why central banks want gold and what value it offers. He said that there were “several reasons” to own gold including “risk diversification”.

This commentary by Mark O'Byrne was posted on the Internet site yesterday---and it's definitely worth reading.  There was another story about this over at the it's headlined "Kazakhstan adds gold for 28th straight month".

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Investment Forecasts For 2015: Interview with Nick Barisheff

G-E:  What is your overall Investment Outlook for 2015?

Nick:  I am seeing 2015 as a year of great volatility and uncertainty and there are many problem areas that could get dramatically worse. Unless something goes drastically wrong, like a Swiss currency issue out of the blue or something along those lines, I don’t think the gold price will do much until September, and will likely stay in the $1,100 to $1,300 range. If nothing dramatic happens, we will have volatility and uncertainty. The U.S. equity markets are experiencing increasingly greater volatility.

G-E:  What asset classes are considered today very inexpensive relative to historical standards and current global economic conditions?

Nick:  For the precious metals sector, gold, silver and platinum are very inexpensive today. Right now there is a rare anomaly where platinum is below the price of gold and silver is grossly undervalued with respect to gold. The silver/gold ratio is around 73:1. Based on the US geological survey of how much gold to silver is in the ground, there is sixteen times more silver than gold in the earth’s crust. Under the U.S. Coinage Act when you had the bimetallism standard, it was 16:1. In 1980 the ratio was 16:1. If the ratio reverted to the mean it would be around 56:1. The prices are way out of line for silver and there is a depressed gold price. Platinum is grossly undervalued, silver is grossly undervalued relative to gold and gold is dramatically undervalued.

Undervaluation brings us to the $10,000 per ounce gold figure. Until 2012, the U.S. debt and the gold price had a positive correlation of 97%. Then the figures diverge through manipulation, the gold price goes down and the US debt keeps rising. To get back to the correlated relationship that has been there for at least 20 years, the gold price would have to return to around $1,800. Gold is undervalued, silver is more undervalued and platinum is undervalued, so there is a lot of catching up to do. Instead of getting distracted by the manipulation, consider it a gift from the central banks. Right now gold, silver and platinum are all at a discount, so it is an ideal time to buy as much as you can.

Nick has never been able to develop the courage to say that precious metal prices are managed, even though he knows they are. This interview with Toronto-based Bullion Management Group CEO Nick Barisheff appeared on the Internet site on Sunday---and I thank reader M.A. for pointing it out.  It's certainly worth reading as well.

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Lawrence Williams: Platinum price puzzles

If anything demonstrates the illogicality of the precious metals markets, it appears to be platinum. But is this really the case? Currently the metal is languishing at around a five-year low, yet most analysts put global platinum supply as being in a substantial deficit situation ever since last year’s South African platinum mine strikes, which took a substantial hunk of the metal out of the markets. Platinum is also selling at a lower price than gold – around $40 an ounce lower at the moment – which is a relatively rare, but not unknown, occurrence.

Indeed the world’s most respected platinum analysts at Johnson Matthey suggested that the platinum deficit last year was upwards of 1.1 million ounces – and in a total global market of around 8.5 million ounces, that is a big percentage deficit of getting on for 13%. Not only was platinum in deficit in 2014, but it had also been in deficit for the previous two years too, although not as large.

Indeed most analysts have been falling over each other to predict better things for platinum prices this year. In the recent LBMA metals forecasting competition both platinum and its sister metal palladium were seen as the precious metals price winners over the year, and while it is early days yet, recent market prices suggest that this may not actually happen.

As you already know, dear reader, platinum prices are managed just as much as the other three precious metals.  It's price won't rise until JPMorgan et al decide---because as you also already know, supply/demand fundamentals mean nothing.  Prices are set in the COMEX futures market by "da boyz"---and until that changes, nothing changes.  This isn't rocket science.   As Chris Powell said: "There are no markets anymore---only interventions." This commentary by Lawrie showed up on the Internet site at 2:17 p.m. GMT yesterday afternoon---and it's the final contribution of the day from Dan Lazicki, for which I thank him.

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Feb 24, 2015

Amid Weak Supply, Existing Home Sales Hit Nine-Month Low

U.S. home resales fell sharply to their lowest level in nine months in January amid a shortage of properties on the market, a setback that could temper expectations for an acceleration in housing activity this year.

The National Association of Realtors said on Monday existing home sales declined 4.9 percent to an annual rate of 4.82 million units, the lowest level since April last year.

"The general tone of this report was weak and it adds to a wide array of housing indicators that have been pointing in the wrong direction, underscoring continued sluggishness in this crucial segment of the economy," said Millan Mulraine, deputy chief economist at TD Securities in New York.

This Reuters piece was picked up by the Internet site yesterday---and I thank reader M.A. for today's first story.

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Dallas Fed Manufacturing Outlook Crashes to April 2013 Lows

The Dallas Fed manufacturing outlook plunged in January - despite Richard Fisher's claims that "everything is awesome" and low oil prices are a net positive for Texas - so it is perhaps not surprising that - with a backdrop of rig count collapses and oil price lows - February's data (delivered late) plunged to -11.2 (against expectations of -4, the 3rd miss in a row, well below every economist's estimates). This is the lowest since April 2013. This is the fastest 3-month decline since April 2013.

Is anyone really surprised? Except of course Richard Fisher  and his esteemed colleagues in the business community in Texas believe that the collapse in oil prices is a net positive for Texas:

"we will lose about 150,000 [oil-based] jobs, but we will pick them up elsewhere since we are a consumer society," and low oil prices is good for everyone.

This commentary, along with some excellent charts, showed up on the Zero Hedge website at 10:45 a.m. EST on Monday morning---and it's the second offering in a row from reader M.A.

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Largest U.S. refinery joins nationwide oil strike

Workers at the largest refinery in the United States on Saturday joined a nationwide oil refinery strike as the union representing them pushes for a new contract that improves wages and safety.

The United Steelworkers union, which represents about 30,000 workers at refineries, terminals, petrochemical plants and pipelines across the country, said the strike expanded at midnight Friday to include the largest refinery in the U.S., the Motiva Enterprises refinery in Port Arthur, Texas.

The union said employees at two other refineries and a chemical plant in Louisiana also planned to strike at the end of Saturday.

So far strikes are underway or have been called at 15 plants, including 12 refineries with a fifth of U.S. crude processing capacity.

This news item was posted on the Internet site on Sunday sometime---and I thank Bill Busser for sending it our way.

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JPMorgan tops list of risky banks: government study

JPMorgan Chase & Co. bears the highest potential hazard to the financial system if it were to fail, a staff study released by a U.S. government research agency showed, providing a first-of-its-kind numerical risk ranking of U.S. banks.

The bank had a "systemic risk score" of 5.05 percent for 2013 in a group of 33 large U.S. bank holding companies, the study by staffers at the Treasury Department's Office of Financial Research (OFR) said.

The study's numerical score is a measure of a bank's risk as a ratio of the total risk contained by a worldwide group of banks. The scores are based on metrics such as size, interconnectedness, complexity and cross-border activities, OFR said.

The OFR said the study reflected the views of the authors, not of the office or the Treasury Department. The findings come as U.S. regulators seek to finalize rules for capital buffers big banks need to hold, to make them more resilient and contain systemic risk if one of them were to collapse.

This should come a no surprise, dear reader.  This Reuters article, filed from Washington, appeared on their website a week ago today---and I thank Karen Brown for bringing it to my attention---and now to yours.

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Yellen Faces Congress Amid Direst Threat to Fed Since 2010

Chair Janet Yellen testifies before Congress this week with the Federal Reserve facing its gravest political threat since the drafters of the Dodd-Frank act tried to strip it of its supervisory powers.

The Fed is being pressured from the left and the right. Senator Elizabeth Warren of Massachusetts and other Democrats have blasted the central bank for being too cozy with the banks it oversees. Republicans, including potential 2016 presidential contender Senator Rand Paul of Kentucky, have focused on its aggressive monetary policy.

Lawmakers from both parties are demanding greater transparency and accountability from an institution that has the power to impose capital requirements for banks and influence how much Americans pay for a mortgage or an auto loan.

“They’re under attack,” said Hester Peirce, a former Republican staff attorney to the Senate Banking Committee, where Yellen begins two days of congressional testimony at 10 a.m. Tuesday.

This Bloomberg story appeared on their Internet site at 10:00 p.m. Denver time on Friday evening---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Whatever Became of Economists and the American economy–Paul Craig Roberts

According to the official economic fairy tale, the US economy has been in recovery since June 2009.

This fairy tale supports America’s image as the safe haven, an image that keeps the dollar up, the stock market up, and interest rates down. It is an image that causes the massive numbers of unemployed Americans to blame themselves and not the mishandled economy.

This fairy tale survives despite the fact that there is no economic information whatsoever that supports it.

Real median household income has not grown for years and is below the levels of the early 1970s.  There has been no growth in real retail sales for six years.  How does an economy dependent on consumer demand grow when real consumer incomes and real retail sales do not grow?

Good questions from Paul.  This commentary put in an appearance on his Internet site on Monday sometime---and the first reader through the door with it was Rob Bentley.

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Chip Maker to Investigate Claims of Hacking by N.S.A. and British Spy Agencies

Gemalto, a French-Dutch digital security company, said on Friday that it was investigating a possible hacking by United States and British intelligence agencies that may have given them access to worldwide mobile phone communications.

The investigation follows news reports on Thursday that the National Security Agency in the United States and the Government Communications Headquarters in Britain had hacked Gemalto’s networks to steal SIM card encryption codes.

The claims — reported on a website called The Intercept — were based on documents from 2010 provided by Edward J. Snowden, the former N.S.A. contractor.

The American and British intelligence agencies are said to have stolen the encryption key codes to so-called smart chips manufactured by Gemalto, which are used in cellphones, passports and bank cards around the world.

This story, filed from London, was posted on The New York Times website last Friday---and it's the first offering of the day from Roy Stephens.

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This is the Biggest Problem Facing the World Today: 9 Countries Have Debt-to-GDP Over 300%

If anyone has stopped to ask just why global central banks are in such a rush to create inflation (but only controlled inflation, not runaway hyperinflation... of course when they fail with the "controlled" part the money para-drop is only a matter of time) over the past 5 years, and have printed over $12 trillion in credit-money since Lehman, the bulk of which has ended up in the stock market, and which for the first time ever are about to monetize all global sovereign debt issuance in 2015, the answer is simple, and can be seen on the chart below.

It also shows the biggest problem facing the world today, namely that at least 9 countries have debt/GDP above 300%, and that a whopping 39% countries have debt-to-GDP of over 100%!

We have written on this topic on countless occasions in the past, so we will be brief: either the Fed inflates this debt away, or one can kiss any hope of economic growth goodbye, even if that means even more central bank rate cuts, more QEs everywhere, and stock markets trading at +? while the middle class around the globe disappears and only the 0.001% is left standing.

This brief article, with two excellent tables of numbers, was posted on the Zero Hedge website at 11:20 a.m. EST yesterday morning---and the first person through the door with this particular story was reader M.A. once again.  It's worth a minute of your time.

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Which New World Order Are We Talking About? - International Man

Those of us who are libertarians have a tendency to speak frequently of “the New World Order.” When doing so, we tend to be a bit unclear as to what the New World Order is. Is it a cabal of the heads of the world’s governments, or just the heads of Western governments? Certainly bankers are included somewhere in the mix, but is it just the heads of the Federal Reserve and the IMF, or does it also include the heads of JPMorgan, Goldman Sachs, etc.? And how about the Rothschilds? And the Bundesbank—surely, they’re in there, too?

And the list goes on, without apparent end.

Certainly, all of the above entities have objectives to increase their own power and profit in the world, but to what degree do they act in concert? Although many prominent individuals, world leaders included, have proclaimed that a New World Order is their ultimate objective, the details of who’s in and who’s out are fuzzy. Just as fuzzy is a list of details as to the collective objectives of these disparate individuals and groups.

So, whilst most libertarians acknowledge “the New World Order,” it’s rare that any two libertarians can agree on exactly what it is or who it’s comprised of. We allow ourselves the luxury of referring to it without being certain of its details, because, “It’s a secret society,” as evidenced by the Bilderberg Group, which meets annually but has no formal agenda and publishes no minutes. We excuse ourselves for having only a vague perception of it, although we readily accept that it’s the most powerful group in the world.

Nick Giambruno, the senior editor over at the International Man website sent this my way yesterday, suggesting that you might find it of interest---and it certainly falls into the absolute must read category as far as I'm concerned.

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Three E.U. dreams that have turned into nightmares

Three stories that were making daily headlines last week all had one very important thing in common. One was the shambles unfolding over Ukraine. The second was the ongoing shambles over Greece and the euro. The third was the ever-growing flood of refugees from Africa and the Middle East desperately trying to escape to safety in Europe.

Over Ukraine, I cannot recall any issue in my lifetime when the leaders of the West have got it so hopelessly wrong. We are treated to babyish comparisons of President Putin to Hitler or Stalin; we are also told that this crisis has only been brought about by Russia’s “expansionism”. But there was only one real trigger for this crisis – the urge of the E.U. continually to advance its borders and to expand its own empire, right into the heartland of Russian national identity: a “Europe” stretching, as David Cameron once hubristically put it, “from the Atlantic to the Urals”.

The “expansionism” that was the trouble was not Putin’s desire to welcome the Russians of Crimea back into the country to which they had formerly belonged; or to assist the Russians of eastern Ukraine in their determination not to be dragged by the corrupt government in Kiev they despised into the E.U. and NATO. It was that of an organisation founded on the naive belief that it could somehow abolish nationalism, but which finally ran up against an ineradicable sense of nationalism that could not simply be stream-rollered out of existence. We poked the bear and it responded accordingly.

This commentary appeared on the Internet site at 7:57 p.m. GMT on Saturday---and I thank Rob Malek for sending it our way.

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Reports of Clashes Between Kiev and DPR Forces Close to Mariupol

Clashes between government forces and the militia of the Donetsk People's Republic [DPR] are continuing on Sunday in the village of Shyrokyno close to Mariupol, representatives of the DPR have told RIA Novosti. According to information from medics, two separatist fighters have been wounded in the fighting.

The village of Shyrokyno is located on the coast of the Sea of Azov in the Donetsk region, between the towns of Mariupol, which is controlled the government forces, and Novoazovsk, which is under the control of the self- proclaimed DPR. In autumn, the town was under DPR control, but then became neutral territory before the Ukrainian government's Azov battalion took control in February. 

On Sunday a DPR representative released a statement reporting the death of one DPR fighter, and two more wounded after an attack from Kiev government forces, while the Ukrainian National Guard reported two fatalities in the course of fighting on Sunday.

This news item showed up on the Internet site at 6:41 p.m.Moscow time on their Monday evening, which was 10:41 a.m. EST.  It's another offering from Roy Stephens.

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Putin: France, Germany genuinely want to find compromise over East Ukraine

The leaders of France and Germany genuinely want to find a compromise that would help end the conflict in eastern Ukraine, Russian President Vladimir Putin said in his latest interview.

Speaking to Rossiya 1 TV channel on the conflict and the breakthrough of the Minsk agreement, Putin said that “it seemed to me [the leaders of France and Germany], have a genuine desire to find such compromise solutions that would lead to the final settlement [of the conflict]...”

He cited the Minsk protocol which includes the decentralization of power in Ukraine and a “reference explaining what it implies.” The authors of the reference are "our German and French partners,” he said, adding that this speaks of their sincerity in finding a compromise.

“I had the impression that our partners have more trust in us than distrust, and in any case believe in our sincerity,” Putin said on Monday.

This article was posted on the Russia Today website at 7:25 p.m. Moscow time on their Monday evening---and it's the second contribution in a row from Roy Stephens.

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France to host meeting on Ukraine crisis on Tuesday

France will host a meeting on Tuesday on Ukrainian crisis in a fresh diplomatic move to enforce the ceasefire deal agreed a week ago despite escalating violence in the country, a government source said on Monday.

A source from Quai d'Orsay press centre told Xinhua that top diplomats of France, Germany, Russia and Ukraine will try to push trough the peace accord breached with recent fighting which claimed two victims on Monday.

More than a week after Minsk agreement, Ukraine's military refused to start withdrawing heavy weapons from the front line in the east as independence-seeking insurgents had not stopped attacking government positions.

The above three paragraphs are all there is to this news item posted on the Internet site at 10:15 p.m. Europe time [I believe] on their Monday evening---and I thank Bill Busser for sending it our way shortly after I'd filed today's column.

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Lavrov: Time to decide if we want U.N. focused and effective or on the sidelines

The U.N. would be effective in settling international disputes, if some member-states didn’t try to use it for dominating world affairs, Russian Foreign Minister believes, adding that such efforts led to bombings in Serbia, war in Iraq and chaos in Libya.

Sergey Lavrov has called for the U.N., about to celebrate its 70th anniversary, to be an independent and effective leader in global decision-making, despite attempts by some of its members to usurp the organization’s functions.

“It’s time to answer the question: do we really want the see the U.N. an effective and influential instrument of preserving peace and security or are we ready to allow it turn into the arena of propagandist struggle, with the U.N. being excluded from the process of finding key solutions to international problems,” Lavrov said, at the open debate for the United Nations Security Council (UNSC), held on Monday in New York.

Sergey is right on the money in this blunt speech---and it's certainly worth reading if you have the time.  It was posted on the Russia Today website at 4:15 p.m. Moscow time on their Monday afternoon---and that makes it three stories in a row from Roy.

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Russia Ratifies $100 Billion BRICS Bank

A BRICS Bank - as an IMF alternative and to enable nations to become less dependent on the global reserve currency - was originally discussed at The BRICS Summit in 2012.  Then at the 2014 BRICS Summit, the framework for The BRICS Bank was approved as "a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies."

Headquartered in Shanghai and chaired by Russia, this week saw what appears to be the final step in the creation of BRICS New Development Bank as RT reports, The Russian State Duma has ratified the $100 billion BRICS bank that will serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa. It is expected to start fully functioning by the end of 2015.

As Russia Today reports:  The Russian State Duma has ratified the $100 billion BRICS bank that’ll serve as a pool of money for infrastructure projects in Russia, Brazil, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.

The New Development Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.

I seem to remember posting a story about this very recently, but I couldn't find it in my last three columns, so here it is again---maybe.  This Zero Hedge piece is their spin on a Russia Today story from Saturday---and once again I thank reader M.A. for sharing it with us.

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Pepe Escobar: China -- Year of the Sheep, Century of the Dragon?

Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

This longish essay by Pepe, filed from Beijing, certainly falls into the absolute must read category---and it was posted on the Internet site on Sunday sometime---and I thank reader M.A. for his final contribution to today's column.

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Jim Rickards --- China: Profit from the Greatest Unwind in Economic History

Early signs indicate that the greatest unwind in modern economic history could begin this year in China. For many investors, the fallout will be painful. If you’re properly positioned ahead of time, however, I believe you can profit.

To do so, it’s important to understand the dynamics in play. Bubbles have three consistent characteristics: They are easy to spot; they persist longer than most investors expect (that’s why they’re bubbles in the first place); and they end badly with massive losses for investors who are still in at the top.

These three traits are related in terms of investor psychology and behavior. Even when investors see a bubble, they often cannot resist riding the wave, because they assume they’ll be smart enough to get out at the right time. The fact that bubbles last longer than most analysts expect tends to validate this investor assumption. People waiting on the sidelines for bubbles to pop are routinely ridiculed by those reaping large gains as the bubble expands.

But in the end, the bubble profiteers tend to stay too long at the party and suffer massive losses, as bubble markets can easily lose 30% or more in a matter of months, sometimes weeks, as assets are dumped and investors head for the exits. Today, the greatest bubbles in modern economic history are in China.

This commentary by Jim appeared on the Internet site on Monday---and I thank Nitin Agrawal for sliding it into my in-box in the wee hours of this morning.  It's certainly worth reading as a contrast piece to the Pepe Escobar article that precedes it.

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CFTC subpoenaed HSBC Bank USA for documents on precious metals trading

The Commodity Futures Trading Commission issued a subpoena to HSBC Bank USA in January seeking documents related to the bank's precious metals trading operations, HSBC said in its annual report and accounts statement on Monday.

The U.S. Department of Justice also issued a request to HSBC Holdings in November seeking documents related to a criminal antitrust investigation that the DoJ is conducting in relation to precious metals, it added.

"HSBC is cooperating with the U.S. authorities in their respective investigations," the bank said. "These matters are at an early stage."

HSBC was one of a number of banks named in lawsuits filed in U.S. courts last year alleging a conspiracy to manipulate gold, silver, platinum and palladium prices, plus precious metals derivatives, during the daily precious metals fixes.

Well, dear reader, HSBC USA---which is an entirely different legal entity than the U.K.'s HSBC---is up to their neck in the gold price management scheme.  I would think that they also have their nose in silver as well, but not as much as in the past.  It's impossible to tell if they're involved in platinum and palladium, but it would be no surprise if they were, as the Bank Participation Report states "3 or less" U.S. banks---and you can safely bet your entire net worth that HSBC USA is on that very short list.

This Reuters story, filed from London, appeared on their website at 9:44 a.m. EST on Monday morning---and it's an item I found on the Sharps Pixley website.

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Ten Banks, Including JPM, Goldman, Deutsche, Barclays, SocGen and UBS, Probed For Gold Rigging

No matter how many times the big banks are caught red-handed manipulating precious metals, some failed former Deutsche Bank prop-trader (you know who you are) will take a vociferous stand based on ad hominem attacks and zero facts that no, what you see in front of you is not precious metal rigging at all but a one-off event that has nothing to do with a criminal banking syndicate hell bent on taking advantage of anyone who is naive and dumb enough to still believe in fair and efficient markets.

The last time this happened was in November when we learned that "UBS Settles Over Gold Rigging, Many More Banks To Follow", and sure enough many more banks did follow, because in Europe, where the stench of gold market manipulation stretches far beyond merely commercial banks, and rises through the central banks, namely the BoE and ECB, culminating with the Head of Foreign Exchange & Gold at the BIS itself, all such allegations have to be promptly settled or else the discovery that the manipulation cartel in Europe involves absolutely everybody will shock and stun the world, which heretofore was led to believe that such things as gold market (not to be confused with Libor or FX) manipulation only exist in the paranoid delusions of a few tinfoil fringe-blogging lunatics.

However, as usually happens, someone always fails to read the memo that when it comes to gold-market manipulation one must i) find nothing at all incriminating if one is a paid spokesman for the entities doing the manipulation such as former CFTC sell-out Bart Chilton or ii) if one can't cover it, then one must settle immediately or else the chain of revelations will implication everyone.

This Zero Hedge gold-related news item appeared on their website at 10:17 p.m. EST last night---and I thank Elliot Simon for digging it up for us.  It's certainly worth reading.

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Ask the Expert: Hugo Salinas Price

In an interview with Geoff Rutherford of Sprott Money News, Hugo Salinas Price, president of the Mexican Civic Association for Silver, describes his plan for introducing an undenominated silver coin for savings and emergency money in Mexico. He adds that countries buying gold, such as Russia and China, are preparing for war if one that is forced on them by Western meddling, and don't want to have to rely on the currency of a potential enemy.

This longish audio interview, complete with an equally longish audio transcript, appeared on the Internet site yesterday---and it's certainly worth your time.  I stole the above paragraph of introduction from a GATA release.

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Jim Grant: It's Clear Why Gold Should Be Better

Gold Stock Analysts' keynote speaker is Jim Grant and Kitco News sits with the interest rate guru himself to see how he sees central bankers affecting gold prices this year. "My hunch is that [the Fed] will be very slow to raise its rate," he says, adding that it will prove to be difficult for the central bank this year. "I think central banks are mainly marching to the same beat of the same drummer. The drummer is of radical intervention," he says. Looking to gold prices, Grant says he is frustrated because he sees "clearly why gold ought to be doing better." He says he can't imagine how anyone can have confidence in the current doctrines of central bankers. "It seems to me that the world will eventually see that these policies are non-starters, or if they are starting they won't end well...that for me is a simple case for gold."

This 7:27 minute video interview appeared on the Internet site yesterday sometime---and my thanks go out to Dan Lazicki for sending it our way.

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Why the "1%" Hates the Gold Standard

By now everybody knows that the primary consequence, one which we originally predicted back in 2009 - and many have since agreed - was completely intended, of the past 6 years of unprecedented monetary policy has been to push wealth inequality to record levels, not just in the US but across the world. What may not be so clear is precisely when this period of unprecedented wealth disparity started. The answer, as the following handy chart from NPR shows, is that long before QE, the wealth gap for the 1% really started in the early 1980s, courtesy of none other than Greenspan's "great moderation."

More importantly, and what is certainly not known, is that between 1930 and 1970, it was only the "bottom 90%" that saw their incomes rise.

This is how the NPR qualified this dramatic variance in wealth gaps, the first of which benefited most Americans, especially the middle-class, and which ended with a thud in the early 1970s, and the second which was unleashed in the early 1980s.

This brief Zero Hedge piece, with a couple of embedded charts, appeared on their website at 5:16 p.m. EST last Friday---and I thank reader Norman Willis for sharing it with us.

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No wonder The Telegraph won't touch gold price suppression

If you're wondering why mainstream financial news organizations refuse to report the biggest financial news story in history -- the rigging of all major markets by Western central banks -- another reason has emerged in the last few days with the resignation of the chief political writer of the London Telegraph, Peter Oborne.

The Telegraph is a great newspaper with a wide scope, the standard bearer of the British Conservative Party, whose reporting is often cited favorably by GATA and frequently has been brave, as when a couple of years ago it exposed the scandal of expense padding by members of Parliament, including Conservative members.

But The Telegraph won't touch surreptitious intervention by Western central banks in the gold market any more than any other respectable Western financial news organization will, and departing The Telegraph, Oborne complained that the newspaper had gone soft in its reporting about a big investment bank that is a major advertiser, HSBC. Reports about Oborne's resignation are collected at the Google news archive.

This very interesting GATA release, along with a few critical read links, appeared on their website yesterday---and it certainly falls into the absolute must read category.

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Fears of Greek exit spark Gold rush for the rich

Panicked investors are rushing to buy gold bullion on growing fears that Greece could be forced out of the Eurozone and currency wars devalue savings held in bank accounts.

BullionByPost has seen the highest demand for gold bullion in its six year history, an exclusive report for the Sunday Telegraph can reveal.

The precious metal dealer, which sold £96m worth of coins and bars last year, said demand during the first five weeks of the year was up 40pc, when compared to the same period a year earlier.

Demand for 1kg gold bars, worth an estimated £26,000 each, has increased by 74pc when compared to 2014.

This gold-related story appeared on The Telegraph's website at 1 p.m GMT on Saturday afternoon---and I thank South African reader B.V. for sending it along.

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South African gold miners rescued after a fire at Harmony Gold

South Africa's Harmony Gold said on Sunday all 486 miners who were trapped underground following a fire had been rescued.

The blaze occurred about 2.3 km (1.43 miles) underground during maintenance on an air cooler at the Kusasalethu mine, a deep level operation west of Johannesburg that is Harmony's single largest gold producer.

The fire started around 0800 GMT and initially some 200 miners were unaccounted for. All operations other than essential services at the mine had been suspended, the company said.

"All 486 employees have been brought to the surface safely," company spokeswoman Charmane Russell said.

This Reuters article, filed from Johannesburg, appeared on their Internet site at 3:02 p.m. EST on Sunday afternoon---and I found it on the Internet site.  An AFP/Reuters article on this subject appeared on the Australian Internet site at 12:46 p.m. ACDT on Sunday---and it's headlined "South Africa mine fire: Nearly 500 workers rescued after blaze contained".  I thank Brad Robertson for finding it for us.

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Shanghai Gold Exchange Chairman: India Will Become SGE’s Largest Partner

The latest Indian Bullion Bulletin has just been released wherein the chairman of the Shanghai Gold Exchange (SGE) Xu Luode presents the SGE’s international ambitions.

"The Chinese government regards the gold market as an indispensable component of China’s financial market and attaches great importance to its growth and development."

Xu provides an excellent all round update of the SGE, though he’s somewhat exaggerating the performances of the SGE International Board (SGEI) up until now IMVHO. I don’t blame him though, the SGEI has great potential!

One way to enhance SGEI trading would be to allow individual foreign investors to have easy access to the international exchange and its wide range of products, which is currently limited to SGEI members (banks, refineries, etc). Xu notes this will change soon.

This longish, but very worthwhile read by Koos Jansen, appeared on the Internet site yesterday sometime---and I thank Dan Lazicki for digging it up for us.

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Gold Meeting: Nixon & Pompidou -- 1971, Azores

President of France Georges Pompidou, President of the United States Richard Nixon and National Security Advisor of the United States Henry Kissinger met on December 13 and 14, 1971, at the Azores to negotiate the value (rigging) of gold and all other major currencies in the world at the time.

Three months prior to the meeting Nixon had halted the convertibility of US dollars into gold for foreign nations at the US Treasury. The French were the most vocal critics of the United States’ flexible monetary policy, or what some people call endless money printing.

This very long essay by Koos appeared on the Singapore website on Sunday sometime---and it's the final offering of the day from Dan Lazicki.

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Feb 21, 2015

It Begins: Goldman Cuts Q1 GDP Due to Snow

... we think that negative snowstorm effects could potentially subtract as much as half a percentage point from Q1 growth compared with a neutral baseline, although there is still plenty of time for activity to bounce back within the quarter. In light of our analysis, we reduced our Q1 GDP tracking estimate by two-tenths to +2.8%. -- Goldman Sachs, February 20, 2015

Back on Monday, we warned that "The Last Time This Happened, U.S. GDP Crashed By 5%", and by this we of course mean the Polar Vortex 2.0 that has gripped the U.S. in a spell of Russian revenge by way of the "Siberian Express" which has blanketed the U.S. in record cold weather.

As a reminder, it was precisely a year ago that economists, clearly unable to realize during the fact that heavy snowfall (in the winter) is disastrous to seasonally-adjusted GDP, decided to blame the harsh weather after the reported GDP fact. After what fact? After seeing Q1 2014 GDP rising as much as 2.5% just shortly before the BEA announced that Q1 GDP was in fact... -2.9%!

This short article appeared on the Zero Hedge website at 10:54 a.m. EST on Friday morning---and today's first story is courtesy of reader M.A.

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WSJ: Subprime Consumer Debt Soars to 7-Year High

Subprime consumer borrowing — encompassing auto loans, credit card loans and personal loans — climbed to $189 billion in the first 11 months last year, the highest total since 2007, according to a study compiled for The Wall Street Journal by Equifax.

That borrowing accounted for 41 percent of total consumer lending outside of home mortgages.

The trend stems from lenders and investors seeking high yields in a low-interest rate environment. So it's no wonder that total household debt rose $306 billion, or 2.7 percent, in the fourth quarter from a year earlier to the highest level since 2010.

"We're going from an era where for many years credit was extremely tight to an era where credit is now looser," Gabriel Dalporto, chief marketing officer of LendingTree, told The Journal.

This news item appeared on the Internet site at 8:40 a.m. EST yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Port strike cuts production at Honda Indiana plant

A labor dispute involving dockworkers that has crippled international trade through the West Coast's seaports has prompted Honda to cut production sharply at its Greensburg, Ind., plant because of a parts shortage.

Honda spokeswoman Anita Sipes said the automaker has tried to use alternative means of getting parts. But she said the dockworkers' contract dispute is preventing Honda's Greensburg plant from getting critical items, including electronics and transmissions, because of cargo bottlenecks at 29 West Coast ports.

To deal with production cuts brought on by that parts shortage, Honda identified Monday and Friday of this week and Feb. 23 as days employees can stay home without pay, take paid time off or come in to work for training or other duties.

Production at the Honda plant will be cut in half for the rest of the week, but Sipes said Honda will re-evaluate the decision as the week progresses.

That's all there is to this brief article that appeared on the Internet site at 6:48 p.m. EST on Wednesday evening---and I thank Bill Busser for passing it around yesterday.

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Doug Noland: The Curse of Moneyness

Financial innovation occurs more subtly and incrementally. Pay really close attention or you’re bound to miss it all. There are variations of financial instruments, institutions, market norms and government involvement. Success, real or perceived, ensures the envelope is pushed – in the markets and with policy. As we’ve witnessed, cumulative incremental policy experimentation over time can result in fundamentally revamped doctrine. In the markets and in real economies, incremental (“frog in the pot”) changes over the life of protracted booms can amount to profound transformations. And that is exactly what’s been experienced with “money” and monetary management.

The nineties saw the age-old issue of fractional reserve banking completely turned on its head. The “evolution” to market-based Credit fashioned what I refer to as the “infinite multiplier effect” – “money” and Credit created, miraculously, out of thin air like never before. With their implicit government backing, the GSEs enjoyed unlimited capacity to issue new debt liabilities – fed by insatiable demand from both home and abroad. During the mortgage finance Bubble, Wall Street relished in the capacity for seemingly limitless issuance of “money”-like mortgage- and asset-backed securities, most guaranteed by the GSEs that were backed by the federal government.

The phenomenal policy response to the bursting of the mortgage finance Bubble unleashed the “global government finance Bubble”. The world has now seen the evolution of unfettered electronic “money” advance to its final act, with profound yet unappreciated ramifications. For the past twenty-five years, each new Bubble has seen the scope of “money” widen to the point of ensuring Credit expansion sufficient to reflate increasingly impaired financial and economic systems. Yet each reflationary episode only compounded global financial imbalances and economic maladjustment. These days, concerted desperate reflationary measures see perilous expansion at the heart of “money” and at the very foundation of global Credit.

Doug's must read weekly Credit Bubble Bulletin appeared in my in-box yesterday evening courtesy of reader U.D., for which I thank him.

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Carl Bernstein: The CIA and the Media

In 1953, Joseph Alsop, then one of America’s leading syndicated columnists, went to the Philippines to cover an election. He did not go because he was asked to do so by his syndicate. He did not go because he was asked to do so by the newspapers that printed his column. He went at the request of the CIA.

Alsop is one of more than 400 American journalists who in the past twenty‑five years have secretly carried out assignments for the Central Intelligence Agency, according to documents on file at CIA headquarters. Some of these journalists’ relationships with the Agency were tacit; some were explicit. There was cooperation, accommodation and overlap. Journalists provided a full range of clandestine services—from simple intelligence gathering to serving as go‑betweens with spies in Communist countries. Reporters shared their notebooks with the CIA. Editors shared their staffs. Some of the journalists were Pulitzer Prize winners, distinguished reporters who considered themselves ambassadors without‑portfolio for their country. Most were less exalted: foreign correspondents who found that their association with the Agency helped their work; stringers and freelancers who were as interested in the derring‑do of the spy business as in filing articles; and, the smallest category, full‑time CIA employees masquerading as journalists abroad. In many instances, CIA documents show, journalists were engaged to perform tasks for the CIA with the consent of the managements of America’s leading news organizations.

This is your big read of the day.  Carl Bernstein, along with cohort Bob Woodward, are legends in the media---and the book, along with the movie "All the President's Men" is based on their Pulitzer Prize winning work at The Washington Post back in the early 1970s.  I remember it like it was yesterday.  This 25,000 word essay appeared in the October 1977 edition of Rolling Stone magazine---and if you have the time and the interest, it's definitely worth reading.  It was something that I was saving for today's column---and I thank reader Norman Willis for bringing it to my attention---and now to yours.

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Dutch Government Releases MH17 Documents, Many Redacted

The Dutch government released dozens of documents Tuesday about the aftermath of the downing of Malaysia Airlines Flight 17, but much of the information was redacted.

One of the Dutch broadcasters that requested the information be made public, RTL News, said it would protest against the number of redactions and take the government to court if necessary to compel it to reveal more details.

"We want the relevant facts so that a serious reconstruction can be made of the Cabinet's performance" after the crash, RTL's deputy editor, Pieter Klein, said on the broadcaster's website.

Prime Minister Mark Rutte's government is coming under increasing pressure to reveal all it knew about the risks of allowing passenger planes to fly over conflict-torn eastern Ukraine last year.

This AP story, filed from The Hague, was picked up by the Internet site back on February 10---and I thank South African reader B.V. for sending it along.

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Danish Krone Collapses After Hints of Capital Controls

Following numerous rate cuts and backdoor Q.E. (halting government bond issuance), Denmark's Krone is collapsing this morning following the head of Denmark's Economic Council, Hans Jorgen Whitta-Jacobsen said:


This has sparked the biggest drop in DKK against EUR since 2001 and as SEB chief strategist Carl Hammer exclaimed, "currency markets are extremely nervous."

Damage control is beginning:


This brief Zero Hedge piece, complete with two excellent charts, showed up on their Internet site at 8:39 a.m. EST yesterday morning---and it's the second offering of the day from reader M.A.  There was a story about this in The Telegraph yesterday as well.  It's headlined "Denmark Ready to Impose Capital Controls to Protect Currency"---and I found it embedded in a GATA release.  As I said before---and I'll say it again now, it's only a matter of time before Denmark's central banks abandons the Euro peg as well, but their putting on a hell of a show in the interim.

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Eurozone Officials Reach Accord With Greece to Extend Bailout

Ending an acrimonious standoff, European leaders hashed out a deal on Friday to extend Greece’s bailout by four months, giving the troubled country a financial lifeline and avoiding a bankruptcy with potentially destabilizing consequences for the region.

The agreement, reached at an emergency meeting of eurozone finance ministers here, paves the way for Greece to unlock further aid from its bailout, worth 240 billion euros, or $273 billion. But the creditors will dole out the funds only if Greece meets certain conditions, setting the stage for tense negotiations that could unsettle the markets and create more political friction with Germany and other European countries.

If Athens moves slowly, it might not get the money for months. Or the deal could fall apart altogether, again raising the prospect of a messy Greek departure from the euro currency.

“As long as the program isn’t successfully completed, there will be no payout,” Wolfgang Schäuble, the German finance minister, said after the negotiations.

This New York Times news item, filed from Brussels, appeared on their website yesterday some time---and it's the first offering of the day from Roy Stephens.  The BBC had a story about this yesterday as well.  It was headlined "Greece bailout: Four-month extension in Eurozone deal"---and it's courtesy of Brad Robertson.

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No Evidence of Russian Military Hardware Presence in Ukraine – Hollande

French President Francois Hollande said Friday at a joint news conference with German Chancellor Angela Merkel that he was unable to confirm the presence of Russian military hardware in Ukraine.

“We cannot confirm that Russian tanks had entered Ukraine,” Hollande said.

Earlier on Friday, Ukrainian military spokesman Andriy Lysenko claimed that some 20 Russian tanks, military hardware and ammunition were seen heading from Russia to the Ukrainian territory.

Ukrainian authorities, alongside the United States, have persistently accused Russia of sending its troops and equipment to war-torn eastern Ukraine, without providing any evidence.

This won't make the neocons in Washington too happy.  This story, filed from Paris, put in an appearance on the Internet site at 4:59 p.m. Moscow time on their Friday afternoon---and it's another offering from reader M.A.

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Pepe Escobar: E.U. Reeling Between U.S. and Russia

Washington has certainly succeeded in permeating an already embattled EU with a little extra – what else – chaos, by pitting the “West” against Russia.

The Obama administration – infested with neo-con cells, those ghosts inside the machine – have always believed that a package of Western sanctions plus a Saudi-unleashed oil price war would be enough to bring down the Russian economy, thus “changing its behavior” on Ukraine, and in the best scenario provoking regime change in Moscow.

Well, it’s not working. Minsk 2.0 – as fragile an agreement as it is – de facto shows Germany (assisted by France), the leading European powers, trying to break away from the American Chaos project.

This must read commentary by Pepe appeared on the Internet site at 3:13 p.m. Moscow time on their Friday afternoon, which was 7:13 a.m. EST in Washington.  My thank go out to reader B.V. for his second contribution to today's column.

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A Ukraine Update: Stephan F. Cohen and John Batchelor

Batchelor and Stephen Cohen are mostly coming to the same conclusions as everyone else about Minsk2.  But the logic and information train is much more interesting. If Minsk2 fails, then Cohen expects a resumption of fighting in the spring when 1) more Ukrainian army troops can be trained and 2) weapons from Poland and the U.S. can be stockpiled for the offensive. Supposedly Poland is a source of old Soviet armor and SP guns etc. that the military is already familiar.

Also discussed is the American training group moving (en route?) to Ukraine, and it is either 400 (as Cohen mentions) or 600 - the latter virtually a battalion of U.S. troops. These are supposedly parachutists. 

The deplorable state of the Ukrainian military and its ability to fight is discussed as well. Something like half of Kiev's forces are gone and what is left is poorly trained and poorly motivated. It is doubtful that it is capable of winning against the rebels. Cohen also speculates, correctly, I think, that Kiev is not at all in control of the extreme militias like the Azov Battalion that has publicly stated it would not honour any Minsk Agreement. That should mean that these paramilitary groups are just as hostile or indifferent to Kiev as the Donbass rebels are.... He then speculates correctly that Poroshenko has no real power in Kiev, and his enthusiasm for leadership is declining, and that perhaps he is preparing to leave, . Summing up: the Ukrainian military is in disarray, the government is very shaky, the economy is only maintained by money (IMF) from the West (and is probably illegally sent) and Russian energy, and it is likely that the war will be pursued only with boots on the ground from the West. That doesn't leave much solidity to the concept of "proxy" war...

Putin's situation was also well explained. He only wants this ended to avoid war with the West and to rebuild his country. He has more cards to play yet. And it appears like a partitioning of Ukraine will be the remaining solution. Cohen sees no possibility for any cooperation like a federated relationship; Kiev has obviously targeted civilians and infrastructure in its efforts and the rightful rage of the rebels toward the west will guarantee a permanent separation.

This 39:50 minute audio interview with Stephen Cohen appeared on the Internet site on Tuesday---and I thank Larry Galearis for sending it our way yesterday.

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Global Politics – a war of meanings: Nikolai Starikov

Today, the world is in a situation that can be characterized as a dead end that the liberal financial-oriented world economy drove itself into after remaining the dominant economic system following the collapse of the USSR. Not going into much more detail on that theme, since doing so would require a whole other in-depth discussion, I will simply point out that, as historical experience and logical consideration confirm, this economic system cannot work without theft. On its own, without infusions from outside, it is not able to sustain itself, therefore a long period in which no one goes to war and no one is robbed, for countries sitting at the top of the liberal “food chain”, will always mean a crisis of the economic system itself. The need for war or theft is a matter of life and death for many (if not for all) countries of the West. The danger for the West today is that “potential victims” are nowhere to be found. In the world of today, the approximate parity of strength is like it was before two world wars, which itself increases many times over the risk of a new world conflict. A classical conflict, as during the previous two world wars, or as a hybrid, hidden beneath a large number of local conflicts (the main goal of which will be not to allow the nuclear weapons deterrent to be used!) together with informational and economic aggression.

What goals are the wars’ organizers aiming for?

First and foremost is a breaking of established economic ties, a deepening everywhere of the economic slide, except for in agreed-upon “economic growth spots”. In the First and Second World Wars this zone was the USA and once again they are trying to repeat this scenario. In addition, a goal of starting wars is the nullification or depreciation of “pre-war” debts and a restart of the world economy. An analysis of the upcoming conflict’s probable zones of destruction and (or) thievery which will permit the world economy to be restarted while preserving the existing economic model and the currently-constituted “economic food chain” for the existing financial elites shows that the level of accumulated contradictions can only be resolved at the expense of Russia and her demolition. The situation in the disparate and ailing enclaves of Europe and Asia, surrounded by the raging chaos that will come from the destruction of our country, will allow the United States to retain for itself the role of regulator of the world’s economy, island of stability, and the source point for new growth. Growth for itself, for Europe, and for Asia under the USAs security guarantees, paid for by the robbery of our country and our people.

This very thoughtful and profound essay, which is on the longish side, appeared on the Internet site on Wednesday---and falls squarely into the absolute must read category for any serious student of the New Great Game.  For length and content reasons, it had to wait for Saturday's column---and I thank Roy Stephens for pointing it out.

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CIA-planted ‘evidence’ may force IAEA review of Iran’s alleged nuke arms program – report

Doctored blueprints for nuclear weapon components supplied to Iran by the CIA 15 years ago could force the IAEA to review its conclusions on Iran’s atomic program, which was potentially based on misleading intelligence, Bloomberg reports.

The details of the Central Intelligence Agency operation back in 2000 were made public as part of a judicial hearing into a case involving Jeffrey Sterling, an agent convicted of leaking classified information on CIA spying against Iran.

“The goal is to plant this substantial piece of deception information on the Iranian nuclear-weapons program, sending them down blind alleys, wasting their time and money,” a May 1997 CIA cable submitted to the court reads.

The intelligence in question pertains to fake designs of atomic components that were transferred to Iran in February 2000.

Why should we be surprised, dear reader.  This Russia Today story, based on a Bloomberg article, appeared on the Russia Today Internet site at 16 minutes after midnight on Saturday morning Moscow time, which was 4:16 p.m. in New York.  I thank Roy Stephens for sending it---and it's certainly worth reading.

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Pepe Escobar: China pivots everywhere

As for the Middle Kingdom as a whole, it has ventured much further than the initial proposition of producing cheap goods and selling them to the rest of the planet, virtually dictating the global supply chain.

Now Made in China is going global. No less than 87 Chinese enterprises are among the Fortune Global 500 – their global business booming as they take stakes in an array of overseas assets.

Transatlantic trade? That’s the past. The wave of the future is Trans-Pacific trade as Asia boasts 15 of the world’s top twenty container ports (with China in pride of place with Shanghai, Hong Kong, Shenzhen, Guangzhou).

Sorry, Britannia, but it’s Asia – and particularly China – who now rule the waves. What a graphic contrast with the past 500 years since the first European trading ships arrived in eastern shores in the early 16th century.

This is Pepe's second must read commentary in today's column.  This one appeared on the Russia Today website at 11:01 a.m. Moscow time on their Friday morning---and it's the final offering of the day from Roy Stephens, for which I thank him on your behalf.

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There's a place in Japan where hundreds of wild foxes are waiting for you to play with them

This very interesting photo essay appeared on the Internet site back on February 6, 2015---and it's definitely worth a minute of your time.  I thank reader M.A. for digging it up for us.

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Sprott Money Weekly Wrap Up

Listen to Eric Sprott share his views on the continual lack of growth in the economy despite “official” data being released, Gold holding steady through tense Greek talks in the Eurozone, and Indian gold imports show that hope is still on the horizon for precious metals.

This 8:59 minute audio interviews with Eric was conducted by Geoffrey Rutherford---and it's worth your while if you have the time.

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Platinum reaches biggest discount to gold in nearly two years

Platinum's discount to gold hit its highest level on Friday since the gold price crash of April 2013, as concerns over the euro zone outlook lifted demand for the yellow metal as a haven, while dampening sentiment towards platinum.

Prices of the white metal fell to 5-1/2 year lows on Friday, weighed by concerns that turmoil in the currency bloc could hurt demand from the European car sector, which accounts for nearly a fifth of annual platinum consumption.

Gold meanwhile recovered from Wednesday's six-week low as investors weighed up whether euro zone finance ministers will reach a deal that would prevent a possible Greek exit from the euro zone.

One can only fantasize about what the real spread might be if both these metals were allowed to trade freely.  This short Reuters article, filed from London, appeared on their website at 2:30 p.m. GMT on their Friday afternoon---and I thank Elliot Simon for sharing it with us.

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What You Need to Know About Russia, Putin, and Gold

With Russia rising to the forefront of world affairs as well as natural-resource-related events, we thought it timely to find out more about Russians’ attitudes toward gold. We’ve been in touch with Russian bullion expert Dmitriy Balkovskiy for over a year and decided to get his take.

Here’s the view from Russia…

Jeff Clark: You mentioned to me previously that Russia is not quite as bullish on gold as the West portrays.

Dmitriy: It seems to me that Western gold investors are too optimistic about Putin’s love affair with gold. The reality is not as straightforward as it’s sometimes portrayed by Western media.

First, a little background. The old Soviet Union viewed gold and silver as strategic metals and a matter of national security. Private ownership of precious metals in any form except jewelry and numismatic coins was strictly forbidden. People went to jail for merely owning a gold bar.

This very interesting interview by BIG GOLD's Jeff Clark appeared on the Internet site yesterday---and it's definitely worth reading.

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Ronan Manly: Spotlight on Greece's gold reserves and Grexit

Greece holds or claims to hold a fairly substantial gold reserve, GATA consultant Ronan Manly writes today, but where it's held, whether it has been irrevocably pledged to the European Central Bank, whether Greece can recover it if it withdraws from the euro bloc, and whether it can be put in play or already has been put in play are open questions.

I thank Ronan for sending me this article yesterday---and I thank Chris Powell for wordsmithing the above paragraph of introduction.  It's a must read.

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Lawrence Williams: China gold demand up 17% Y.T.D.

With another 59 tonnes of gold withdrawn from the Shanghai Gold Exchange (SGE) in week 6, Chinese demand, as represented by the SGE, is already up 32% on last year at 374 tonnes (as against 320 tonnes a year ago) – and last year’s first six weeks were a previous record, although perhaps not directly comparable as the New Year holiday fell a little earlier in 2014. With this year’s holiday period now in full swing, and with the SGE closed for the week long duration, we are going to see something of a fall-off, which is probably one of the factors adversely affecting the global gold price over the past week. If you take this much gold demand off the market then prices are almost certain to weaken, although it is gold in the pipeline from the West to China and other points East which should be setting the pattern and this will still be substantial.

Gold analysts believe, not without reason, that Chinese demand will now fall off in intensity perhaps through to the beginning of Q3 as it did last year, once the New Year gift giving is out of the way. Thus SGE withdrawals once market activity re-commences effectively in ten days’ time, will be followed particularly closely by those looking to try and assess the likely level of overall Chinese demand in 2015. While the country’s economy is seen as slowing down considerably, it is not considered to be in recession so there has still been a continuing build-up of wealth and in those seen as entering the middle classes who have particularly embraced a gold-buying culture.

This must read commentary by Lawrie appeared on the Internet site yesterday---and I found it all by myself.

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